November 26, 2011

The Efficiency Expert

I was first introduced to Provectus in 2006 by a hem-onc who has a good track record of assessing the likelihood of drug compounds moving through clinical trials based on his bedside view of patient reaction. He had heard of the early MM Phase 1 trial results coming out of Australia, which were a couple or more standard deviations above what one typically sees in an early stage clinical trial (understanding and adjusting for the limitations of Phase 1 trials).

As I delved into the breast Phase 1 trial design (and results), the two MM trials, the liver trial, the expected liver Phase 2/Phase 3 (or Phase 2) trial and and the contemplated pancreas Phase 1 trial, I have continued to be struck, pleased and always surprised by their efficient design approach that provides much more information than the typical comparable trial by other companies.

A quick 'n dirty comparison of the companies Stonegate Securities recently used in their equity research note of mid-November, focusing primarily on each company's balance sheet's accumulated deficit:

I could spend hours discussing with you my thoughts of the above table. For now, my main takeaway is how little money the company has spent in order to get this far. There are more nuances to the analysis, such as partnering or the lack thereof. A dollar invested in one company versus another at a given point in time using the same exit assumption produces two very different return profiles and expectations. I expect Provectus' efficient use of capital ultimately will translate into a much higher per share acquisition price than many of these other companies can expect to enjoy.

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